The Islamic laws are strict and one needs to make sure they abide on all the rules if they follow this religion. It mainly relies on the teachings of the prophet Mohammed and the message is found through the Islamic holy book called the Quran. Here, the followers get the daily teachings as well as find the laws they need to follow. When it comes to matters of insurance, one need to be very careful since this is supposed take care of matters that arise.
When one dies, all the money and property they have is sent to the family members if they have not left a will. When they die and they have left any form of debt, the total amount is given to the people they owe. This is the major rule in Islam that no one should die, leaving any debts and they need to make sure they have cleared all debts when they are alive or when they die, their families will take care of clearing the debt. This follows the pattern in most of the Western world, whereby the survivors of the person assume responsibility for any remaining debts.
How does Islamic Takaful apply?
Long ago, when the Arabs were trading, they decided to combine the funds in a mutual fund for insurance reasons. This was to benefit the people, who had difficulties in clearing the debts and they use the chance from the fund. Every member had the chance to take part in this trust and when they have passed on, the family gets the benefit. When people are trading, they end up taking loans and this mutual trust helped the traders in acquisition of capital. Through this fund, they would get all the assistance they need but when they have debts, the cash is deducted from their fund.
The work Takaful means to compensate each other and this made it easier for the traders to work along well together. This cut down on the lending costs and it built trust among the traders. When one takes time to invest in the fund, it makes it easier for them to deal with the other traders who are in the same mutual trust. This lead to the term insurance and compensation and one discovered who was safe to deal with amongst the other traders.
The Takaful made the Islamic traders close since they had to meet occasionally when they were dealing with an issue of compensation. When it comes to matters of trade and interest in the Islamic society, they are very strict and take time to deliberate on the issue. This method led to the emergence of trade in the Arabic world since it was easy for them to access the funds.
Takaful and insurance
Currently, this method is still going on in the Islamic countries but it has two pillars, which include the Mudarabah and Waqalah. They revolve around profit sharing and loss sharing especially in these days, where most of the Islamic countries are tied down to terrorism.